Governments should prioritise environmental and social factors in their budgets instead of GDP, Iceland’s prime minister has urged, in a call for “an alternative future based on wellbeing and inclusive growth”.

Katrin Jakobsdottir emphasised “the need to restructure our economy” in order to tackle climate change and address inequality in a speech at London’s Chatham House think tank on Tuesday ahead of the Nato summit.

Iceland is part of the Wellbeing Economy Alliance – a network of countries and organisations developing frameworks to measure social, economic and environmental factors in a way that allows countries to move beyond GDP as the sole marker for economic success. 

Scotland and New Zealand are also part of the group, with Jacinda Ardern unveiling in May what she described as the world’s first “wellbeing budget”, prioritising mental health, domestic violence and child poverty.

“Globalisation has brought wealth to some areas and people, but taken it away from others,” Ms Jakobsdottir said. “The same pattern is evident with the incorporation of new technologies.

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